NIFTY moved very sharply towards the close of the day to the high point.
On April 26, 2018 ( April Expiry ), NIFTY was 10617. A move of about 1.1% in more than a month and almost entirely coming on the last day. In between, we had joy rides in both directions. No one is the wiser which way the markets intend to move and it is not necessary to know either.
Let us look at the results achieved by our selections.
On the first day, we had 6 selections.
2 for BUY and 4 for SELL.
We are right in both the BUY selections and right in 2 out of 4 SELL selections. Being right in 4 trades out of 6 is a decent performance and this once again tells us that simple methods of stock selections for trading actually work.
You do not have to be a technical analyst or a super specialist to find the trades. Keeping your eyes open and ability to read the screen is enough.
This is how the 2 BUY stocks performed:
NIFTY moved up by 1.11% but these two stocks moved up almost 8% and could have resulted in a profit of Rs. 138360 in futures trades. Just 2 trades for this profit. This is called the Art of doing Nothing.
Well, time for reality check. Let us see what happened to SELL selections:
2 Right and 2 Wrong. SBIN wrong by 15% and TATAMOTORS right by 15%.
But SBIN lot size is 3000 as compared to 1500 of TATAMOTORS. So we had a big loss in SBIN.
But the point to note is that HINDPETRO made a 52 week low of Rs. 272.30 in this month before recovering and ending up as a losing trade for us. BHEL made a 52 week low Rs. 73.70 on May 24 and then recovered. That takes away almost Rs. 75000 from the profits.
These 4 selections end up with a loss of Rs. 28192.
So the net profit from 6 trades comes to Rs. 110168.
Option Trades :
This series was about Options.
I was very apprehensive to begin with Option Selections because there are so many ways an Option can go wrong. But they can go right wonderfully too.
We shall first have a look at the entire selection list:
After the initial 6 selections, another 5 were added at different times.
The chart tells us that we were right in only 4 out of 11 trades.
How right we are when we are right?
Let us see the wrong trades also.
BHEL PUT 80 had gone to a high of Rs. 5.95 on May 24, 2018.
MARUTI 8600 PUT had traded above Rs. 300 during this expiry.
UPL, HINDPETRO, HCC all had become profitable ( handsomely) before turning around and ultimately expiring worthless.
But TATAMOTORS did the good work in PUTS and HINDUNILVR in CALLS.
How to trade in such situations ? :
Stock selection, luck and patience all need to click rightly to make money in Option Trading. Patience does not come easily to all of us. There is always a worry that the trend may reverse while we are waiting. And it does happen quite regularly.
This is what makes Option Buying a bit complicated.
Let us make it simple.
As in the case of BHEL, we have seen that it became worthless ( Rs. 0.00 ) from a high of Rs. 5.95. To give away almost Rs. 45000 is too bad.
I had bought this PUT for Rs. 0.85 ( Suggested here at Rs. 0.55) and exited when it was Rs. 4.90. At the same time moved to PUT 75 at Rs. 1.80.
Naturally if PUT 80 is worthless finally, so is PUT 75. But in this case part of profit is booked.
If the trend continues in your favor, life is good. Otherwise, some profit gets booked.
May selections ended well though the results could have been better.
The main point again — Selection process is simple. Everyone can do it right.
May is over. We move on to June 2018.
Expiry is on June 28. No holidays. Total 20 days of trades.
We hope and expect good results for our trades in June.
Selections in another post.
Keep reading and posting your comments and suggestions.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.
Mohammed Azharuddin June 1, 2018 at 4:46 am
Waiting for your selections posts for this month.Reply
admin June 1, 2018 at 3:41 pm
Selections are posted. Let us hope they do well.Reply
Rutul Parekh June 1, 2018 at 7:32 am
Pramodji, you’ve shown time and again that the simplest way is the best way…Reply
Profit arising out of option trades in May series could’ve been much much more than 67450/- had profit booking been done by exiting on achieving 3:1 or 4:1 R:R…
Prince Nahata June 1, 2018 at 8:03 am
Sir,welcome back in India(?).Once again great post and looking forward to your June selections.Reply
admin June 1, 2018 at 3:40 pm
I am in Germany for next three weeks. Anyway, I will keep posting here.Reply
Alok June 1, 2018 at 9:58 am
Thank you for the update sir, hoping for a profitable June!Reply
admin June 1, 2018 at 3:38 pm
We all look for profitable trades but run away from them when they actually happen.
All the best for June.Reply
Bhawani June 1, 2018 at 12:26 pm
Hello Sir ,
I am waiting for the June selection . May selection was okay okay , one of the script TATAMOTOR I have made profit of 8900.00Reply
admin June 1, 2018 at 3:35 pm
Like I say it many times, it is patience which pays. I had PUT 310 bought at Rs. 4.50 which was sold just before close on Expiry day at Rs. 27.50.
Selections for June are posted.